Cornwell v. Safeco Ins. Co. of America
| Citation | 42 A.D.2d 127,346 N.Y.S.2d 59 |
| Decision Date | 06 July 1973 |
| Docket Number | 2 and 3,Nos. 1,s. 1 |
| Parties | John E. CORNWELL and Joseph P. Ross Agency, Inc., Respondents, v. SAFECO INSURANCE COMPANY OF AMERICA, Appellant. John E. CORNWELL and Joseph P. Ross Agency, Inc., Appellants, v. SAFECO INSURANCE COMPANY OF AMERICA, Respondent. Mary E. SACCO, Administratrix of the Estate of Joseph E. Sacco, Deceased, Respondent, v. John E. CORNWELL, Individually and as Co-Partner, et al., Appellants. (and 4 other actions). Appeal |
| Court | New York Supreme Court Appellate Division |
Costello, Cooney & Fearon, Syracuse, for Safeco Ins. Co. of America; Bruce B. Roswig, Syracuse, of counsel.
Bond, Schoeneck & King, Syracuse, for John E. Cornwell & Joseph P. Ross Agency, Inc.; John J. Dee, Syracuse, of counsel.
Richard C. Mitchell, Oswego, for Mary E. Sacco and Pelin.
Kirke M. White, Oswego, for Keefe.
Joseph A. Volotta, Fulton, for Michael Bodwitch and Koski Agency, Inc.
Rauch, Gordon & Huffman, Syracuse, for Chrysler Motors Corp.
Amdursky & Hurlbutt, Oswego, for Lewis Goodman, Inc.
Before DEL VECCHIO, J.P., and MARSH, MOULE, SIMONS and HENRY, JJ.
We have before us appeals from judgments and orders in two separate but related cases. The first is a negligence action in which plaintiffs, the Joseph E. Sacco Estate (Sacco), the Edwin T. Keefe Estate (Keefe) and William R. Pelin (Pelin) were awarded damages totaling $249,308.50 against defendants Michael Bodwitch (Bodwitch), John E. Cornwell (Cornwell), Joseph P. Ross Agency, Inc. (Ross) and Koski Agency, Inc. (Koski). The second is an action by Cornwell and Ross against Bodwitch's insurance carrier, Safeco Insurance Company of America (Safeco), to recover the amount of a judgment recovered in the first action in excess of Safeco's policy limits based on its providing them with an inadequate defense of their interests in the first case.
The actions arose out of an accident which occurred on January 20, 1967 when an automobile owned and operated by Sacco, in which Keefe and Pelin were passengers, collided on his side of the road with one owned and operated by Bodwitch, who was alone. Sacco and Keefe were killed and Pelin injured. In March, 1967, when the actions were brought by Sacco, Keefe and Pelin, Safeco retained an attorney to represent Bodwitch.
On November 10, 1967 at an examination before trial Bodwitch testified that at the time of the accident he was on the business of Cornwell, his partner in a real estate holding, and also on the business of Ross and Koski. Subsequently, Cornwell and the agencies were named as additional defendants and Safeco, under the provisions of its policy with Bodwitch, which in addition to providing coverage for him also provided coverage for any other person legally responsible for the use of his car, retained the same attorney who was defending him to represent them. The answer interposed on behalf of the defendants admitted the existence of a partnership between Bodwitch and Cornwell but denied that Bodwitch was operating his vehicle on the business of Cornwell and the two agencies.
Later, Bodwitch brought suit, alleging negligence and breach of warranty, against Chrysler Motors Corporation (Chrysler), the manufacturer of the car he was driving, and Lewis Goodman, Inc (Goodman), its seller. The plaintiffs Sacco, Keefe and Pelin also added Chrysler and Goodman as defendants in their actions.
The cases were tried in the winter of 1969. At that time, Bodwitch, called by plaintiffs in the suit against him, testified, as he had at the examination before trial, that at the time of the accident he was operating his automobile on the business of his three co-defendants. This testimony was received without objection or cross-examination by the attorney who was representing him and the other defendants, and no contradictory testimony was offered. Cornwell, the only other person who knew of the events of January 20, 1967 preceding the accident, and whether he and Bodwitch had a real estate partnership and whether Bodwitch was on its business and/or that of the Ross Agency on that day, was not called to testify.
Consequently, on the basis of Bodwitch's uncontradicted testimony, the trial judge instructed the jury that Bodwitch was on the business of the other defendants and any verdict against him would be applicable against them also. Safeco's attorney took no objection to this charge.
The jury returned a verdict in favor of Sacco for $125,204.50, of Keefe for $113,839.00 and of Pelin for.$10,265.00, totaling $249,308.50 against all defendants except Chrysler and Goodman and one of no cause of action in Bodwitch's suit against Chrysler and Goodman. On March 11, 1969 judgment was entered upon the verdict.
Safeco determined not to prosecute an appeal and paid its policy into court, resulting in a partial satisfaction of the judgment to the extent of $101,816.86, leaving a balance of $147,491.64 for which Bodwitch, Cornwell, Ross and Koski were liable. Safeco then withdrew from the case, rejecting Cornwell's demand that it appeal the judgment. Cornwell and Ross retained their own counsel and on appeal the judgment in favor of the plaintiffs was affirmed by this court in Sacco v. Bodwitch, 34 A.D.2d 885, 312 N.Y.S.2d 259, mot. for lv. to app. den. 27 N.Y.2d 484, 314 N.Y.S.2d 1026, 262 N.E.2d 556.
In February, 1970, Cornwell and Ross commenced an action against Safeco to recover the amount of the excess judgment, alleging: first, that Safeco did not negotiate in good faith and did not exercise due care; second, that Safeco's retainer of one attorney in the negligence case to represent all defendants resulted in a conflict of interests; third, that Safeco's refusal to prosecute the appeal neglected the interests of Cornwell and Ross and forced them to expend their own funds for counsel; fourth, that Cornwell's credit was damaged and that he sustained physical and mental anguish as a result of the excess judgment and, fifth, that Ross sustained loss of credit.
At the trial, Cornwell testified that he and Bodwitch were tenants in common of the building occupied by Ross but they were not partners. He said that he asked Bodwitch to come to Oswego on January 20, 1967 to discuss a prospective tenant and the remodeling of a room, and at 1:30 p.m. when Bodwitch arrived at the building, they looked at the room and decided to obtain estimates for the necessary work. They then went to lunch and each had three drinks before and three drinks after lunch; the building was not discussed. They then went to the Ross Agency office where Cornwell attended to some business. Bodwitch read the newspaper for a while and left for Fulton about 5:30 p.m.; they didn't discuss Ross or Koski at all that day.
Cornwell further testified that after the accident he was interviewed by a Safeco claims adjuster and told him what occurred at the meeting with Bodwitch before the accident and that, when he was served with the summons and complaint, he informed Safeco's claims adjuster that the allegations of the complaint were untrue. In March, 1968 he told Safeco's attorney that he and Bodwitch were tenants in common of a building but were not partners and that there had been no discussion about Ross or Koski business on the day of the accident; he also told him the number of drinks Bodwitch had before the accident. He did not see Safeco's attorney again, except casually, until the time of trial when the attorney told him he would not have to testify and that the actions against him would be dismissed. He said he was present when Bodwitch testified and that he told Safeco's attorney that Bodwitch was lying 'about being on my business' and was told to calm down, that it would not be necessary for him to testify, that plaintiffs had a strong case against Chrysler and he would be out of it. He continued to attend the trial and was not called as a witness. No one objected on his behalf to Bodwitch's testimony; no one cross-examined Bodwitch on his behalf. He hired his own counsel to take an appeal.
Safeco's division claims supervisor admitted that it knew Cornwell denied Bodwitch's claim that he had been on Cornwell's business but admitted that Safeco had no intention of calling Cornwell as a witness and that no consideration was given to hiring separate counsel.
Safeco's attorney stated that the answer interposed on behalf of Cornwell and the two agencies admitted the partnership and denied that Bodwitch was on the business of Cornwell and the two agencies. He admitted that he had prepared the answer before conferring with Cornwell about the allegations in the complaint. He also stated that on February 28, 1968 (more than one year after the accident), Bodwitch told him for the first time about an alleged steering defect in his vehicle. He said that Bodwitch told him Cornwell was his partner. He did not confer with Cornwell about trial strategy nor tell him why he was not going to be called to testify. Cornwell told him there had been no business discussion concerning Ross or Koski on the day of the Bodwitch accident and that, during the trial, Cornwell told him he didn't want to sit there and listen to Bodwitch lie. He did not discuss the conflict between the position taken by Bodwitch and that of Cornwell and the advisability of Cornwell having separate counsel.
An attorney testifying for Cornwell as an expert witness concerning Safeco's defense of the actions against Cornwell and Ross, said that Safeco had not exercised reasonable care and proper conduct in retaining one attorney to represent Bodwitch and the others. He also stated that it was not good practice to admit a partnership between Bodwitch and Cornwell, which was done by Safeco's attorney, not good practice to fail to put Cornwell on the stand to contradict Bodwitch's testimony, and not consistent with good practice to refrain from cross-examining Bodwitch on Cornwell's behalf.
Bodwitch testified that he never...
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